Gazundering and gazumping are bad buying and selling etiquette. Both were popular practices in the 80s but are thankfully less so now that property prices are more stable. A lot of the problem is down to the way that the UK’s system operates, allowing either party to pull out at the last minute, which actually encourages this behaviour. In other countries such as France, however, a non-refundable deposit is given up-front to secure the property — usually up to 10% to demonstrate serious intent. Because in the UK nothing is finalised until the last minute, greed and second thoughts can take over.
What is gazumping?
Gazumping occurs when a seller has accepted a buyer’s offer but then accepts a higher offer from another interested party. This can happen at any time before contracts are exchanged, without signed papers neither party are under any obligation to buy or sell. This is bad news for the buyer. Not only do they lose out on the property, if they have already had surveys completed and paid solicitors they will not get any of this money back — often hundreds, if not thousands of pounds — leaving them out of pocket and without their dream house.
The estate agent is required by law to tell the seller if additional offers are made and it is up to the seller if they consider any additional offers.
If you’re worried about being gazumped you can choose to sign an exclusivity agreement that details an exclusivity period with the seller. A number of insurance companies also offer policies that mean you can recover any fees you have incurred as a result of being gazumped.
The best way to avoid being gazumped is to keep the legal work/ the conveyancing moving along as quickly as possible. Ask for the property to be taken off the market when your offer has been accepted with a sold or under offer sign to be put up and most importantly, keep in communication with the seller’s agent. If the seller knows the sale is progressing they are less likely to consider interest from other buyers.
What is gazundering?
Gazundering is more common in a buyer’s market. This is a sneaky tactic whereby the buyer waits until the last minute when everyone in the chain is ready to exchange and then at the last minute lowers their offer. The seller can of course refuse but by this point there is usually too much at stake: schools and jobs have been decided, removal services booked and a lot of money has already been sunk into the move. If the seller refuses at this point it is likely that the whole chain would collapse. Buyers who gazunder know that the seller is also probably in a chain and refusing to accept the reduction in price will mean losing their new home.
To avoid being gazundered start with the asking price, make sure it’s realistic. If you have a realistic price the more quickly you will get an offer for the property and the less likely you will be to end up desperate and selling at any price. Also being upfront about any problems with the property makes it more difficult for buyers to negotiate on these terms late in the game.
Speed is of the essence if you want to avoid being gazumped or gazundered. Keep the sale progressing, this way the buyer will have less time for second thoughts.
Read also: 6 house buying tips when viewing a house
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